“What is estate planning?” As an attorney who specializes in it, this is the question I get the most. Estate planning can be one of the most important processes a person can undertake, and yet, it is rarely discussed or taught in our society. Perhaps it’s because we tend to think of it as something only for the elderly, or for the rich. However, if done properly, it can be beneficial to people of all ages and income levels.
Estate planning is a broad term that refers to the process of arranging the distribution of assets of an individual in the event of their incapacitation or death. Assets can include real property, vehicles, bank and retirement accounts, and personal property. Let’s discuss some examples of estate planning documents and their components and functions.
An estate planning document that most adults are at least somewhat familiar with, is a will. A will gives direction as to how you want your property and assets distributed after your death. It also allows you to appoint a guardian for children, or relatives who need assistance due to old age or infirmity. However, a will is not legally binding, and the court may decide to alter it, going against your wishes.
The best way to avoid the court altogether is with a trust. A trust is a legal entity funded with an individual’s, or trustor’s, assets. A designated person or business entity known as a trustee, will then distribute those assets to beneficiaries named by the trustor upon the trustor’s incapacitation or death. A trust differs from a will in that because it is its own legal entity, everything put into the trust becomes part of it and does not need to be probated. It also differs from a will in that it goes into effect as soon as you create it, whereas a will takes effect only after you die.
An advance directive and power of attorney are also essential components of estate planning. An advance directive states your wishes regarding medical treatment in the event you are unable to communicate them to a doctor. You may also choose to select a medical power of attorney as a part of the advance directive, who can make medical decisions on your behalf. Similar to a medical power of attorney, a power of attorney handles financial matters on your behalf, which can include the payment of bills, the management of bank accounts and stocks, the selling of property, and even the filing of taxes.
It is never too early to being estate planning. Here at Entrusted Estate and Asset Protection, we can help you with any and all estate planning needs. Give us a call at 248-781-8338 to schedule your free consultation!